How to Mobilise the Missing Middle
Industry Innovation and Science Australia (IISA) has just published “Mobilising Australia’s Missing Middle,” identifying medium-sized enterprises (MSEs) as the undervalued contributors to productivity and economic complexity.
This is an important article, one that hopefully gets the Minister’s attention.
MSEs with 20-199 employees are innovation-intensive, export-oriented supply chain connectors that Australia needs more of. IISA calls for industry-led mobilisation and treating MSEs as a distinct cohort deserving tailored support.
The Industry Growth Centres Initiative was designed on this exact model. The outcome generated $1.23 billion in benefits against $305 million investment, according to ACIL Allen’s independent evaluation. Yet internal politics and departmental resistance saw it abandoned, despite the clear evidence of success.
The Growth Centres ran from 2016 to 2021 with a clear objective: drive industry-led innovation and productivity growth. The goal was to leverage areas where Australia had a natural competitive advantage, including Medical Technologies, Food and Agriculture, Energy resources, and Mining innovation. Two additional centres were established to focus on capabilities that needed attention: Cyber Security and Advanced Manufacturing.
Growth Centre structure and governance
Now it must be said the initiative certainly wasn’t perfect. Six separate boards meant six governance structures, six executive teams, and six different interpretations of “industry-led innovation.” It may have been more effective for a single board comprised of leaders with demonstrated track record scaling Australian companies to manage coordination and performance. Arguably this was the purpose of the Industry Growth Advisory Board, but they were not empowered with the necessary operational authority and departmental support to drive consistent performance.
What was delivered
Despite these structural challenges the growth centres themselves proved the model could work. The independent ACIL Allen evaluation recognised METS Ignited for generating $897 million in company revenue from $16.1 million in government investment, achieving the program’s highest industry co-investment ratio and export orientation metrics. This translated to over 1,000 new jobs and 2.5 times industry co-funding of every public dollar.
That return came from supporting the types of companies IISA describes: established firms with emerging scale, R&D intensity, and export potential. Not startups hoping to find product-market fit. Funding companies with customers, like IMDEX partnering with UFR in developing advanced drilling systems for global mining operations, or established engineering firms such as AMOG integrating university research into products already selling internationally.
The methodology wasn’t theoretical, it was the very definition of vendor-centric innovation. Companies had to demonstrate commercial capability before accessing research partnerships. They needed proven revenue and the commercial maturity to translate research into market-ready products. Most importantly they had to find customers, with purchase orders proving commercial validation.
The principles that worked
IISA’s report identifies what MSEs need, and METS Ignited showed how to deliver it through five implementation principles that distinguished the program from typical grant-focused approaches.
Customer accountability from day one
Companies couldn’t just apply for funding with a good idea. They had to demonstrate industry demand by securing co-investment from potential customers. This created commercial discipline before any public funding flowed. If their customers weren’t willing to back a technology development, that said something about market readiness.
Commercial maturity assessment before research partnership
Companies were evaluated on financial capability, market access, technical integration capability, and organisational readiness. A company with high technical capability but no established sales channels wasn’t ready. Neither was a firm with great market access but insufficient operational infrastructure to deliver at scale. Both needed addressing when seeking collaborative funding support.
Sustained investment timelines matching commercial reality
MSE development doesn’t fit three-year project grant cycles. Projects end, but companies endure. Funding support was designed for multi-year company development, recognising commercialisation takes time and requires patient, sustained engagement. This aligns with IISA’s observation that MSEs combine small business agility with emerging scale and systems.
Vendor ecosystem focus, not end-market obsession
Funding was not intended to create new consumer brands or chase end-market disruption. It supported Australian companies who created solutions for customers. These ‘vendors’ are the translation engines with established market presence that commercialise innovation into globally competitive products and services.
Measurable commercial outcomes, not research outputs
Success was defined by hard metrics. This meant revenue growth, export sales, jobs created, and sustained company capability. Not publications, patents, raises or partnerships announced in media releases. This focus on commercial outcomes reinforced that research collaboration served business strategy, not the other way around.
The Industry Growth Centres delivered results even though they worked outside departmental comfort zones. Industry-led governance provided commercial discipline that bureaucratic process could not replicate. What IISA identified requires exactly what makes the Department uncomfortable: trusting innovation to commercial leaders who answer to outcomes, not process.
Back to the Future Made in Australia
IISA calls to “explore success stories of thriving MSE segments” and “consider ways to refine programs to uplift MSEs and meet their distinct needs.” The good news is this has already been done, and ACIL Allen documented the methodology, measured the outcomes, and proved the model works. The Growth Centre Initiative generated $1.23 billion in returns against $305 million invested. The evidence isn’t theoretical; it is a measurable track record.
The companies that were supported are still operating, many have scaled internationally. Others have been acquired by global players, validating both their technology and commercial execution. What these outcomes demonstrate is that Australia can build and scale MSEs when the support structure aligns with how commercial translation works.
The National Reconstruction Fund and Future Made in Australia are deploying billions in debt and equity. These programs are important, but they don’t support existing local capability. The department-led Industry Growth Program has been unable to deliver comparable outcomes; This isn’t about funding, it is how programs are designed and delivered.
Restoring systematic MSE support boils down to three things: commercial discipline enforced through co-investment requirements, sustained multi-year company relationships rather than project cycles, and governance by those who built and scaled companies locally. Not academic researchers or policy advisors, but commercial leaders with track records turning research into revenue.
IISA identified what Australia needs, and while internally unpopular within the Department, the Growth Centres proved it. What Australian innovation needs now is leadership to implement existing know-how leveraging those who have done it before.